Is Texas Industries, Inc. (TXI) Going to Burn These Hedge Funds? – James Hardie Industries plc (ADR) (JHX), Eagle Materials, Inc. (EXP)

Texas Industries, Inc. (NYSE:TXI) was in 18 hedge funds’ portfolio at the end of December. TXI has experienced an increase in activity from the world’s largest hedge funds lately. There were 10 hedge funds in our database with TXI positions at the end of the previous quarter.

Texas Industries, Inc. (NYSE:TXI)

In the eyes of most investors, hedge funds are assumed to be slow, outdated investment tools of the past. While there are greater than 8000 funds with their doors open today, we hone in on the leaders of this group, close to 450 funds. Most estimates calculate that this group oversees most of the smart money’s total capital, and by monitoring their highest performing stock picks, we have formulated a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as key, optimistic insider trading sentiment is a second way to break down the investments you’re interested in. Obviously, there are lots of motivations for a bullish insider to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this strategy if shareholders understand where to look (learn more here).

Consequently, it’s important to take a gander at the recent action surrounding Texas Industries, Inc. (NYSE:TXI).

What have hedge funds been doing with Texas Industries, Inc. (NYSE:TXI)?

Heading into 2013, a total of 18 of the hedge funds we track were long in this stock, a change of 80% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully.

Of the funds we track, Mason Hawkins’s Southeastern Asset Management had the biggest position in Texas Industries, Inc. (NYSE:TXI), worth close to $418 million, accounting for 1.8% of its total 13F portfolio. The second largest stake is held by Donald Chiboucis of Columbus Circle Investors, with a $27.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Chuck Royce’s Royce & Associates, Mario Gabelli’s GAMCO Investors and Andrew Sandler’s Sandler Capital Management.

Consequently, specific money managers have been driving this bullishness. Columbus Circle Investors, managed by Donald Chiboucis, established the most outsized position in Texas Industries, Inc. (NYSE:TXI). Columbus Circle Investors had 27.2 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also initiated a $16.3 million position during the quarter. The following funds were also among the new TXI investors: Drew Cupps’s Cupps Capital Management, Richard Driehaus’s Driehaus Capital, and Thomas A. Giovine’s Giovine Capital.

What do corporate executives and insiders think about Texas Industries, Inc. (NYSE:TXI)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has experienced transactions within the past six months. Over the latest six-month time period, Texas Industries, Inc. (NYSE:TXI) has experienced 2 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Texas Industries, Inc. (NYSE:TXI). These stocks are CRH PLC (ADR) (NYSE:CRH), Cemex SAB de CV (ADR) (NYSE:CX), James Hardie Industries plc (ADR) (NYSE:JHX), Eagle Materials, Inc. (NYSE:EXP), and Cementos Pacasmayo ADR (NYSE:CPAC). This group of stocks belong to the cement industry and their market caps match TXI’s market cap.

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Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
CRH PLC (ADR) (NYSE:CRH) 6 0 0
Cemex SAB de CV (ADR) (NYSE:CX) 28 0 0
James Hardie Industries plc (ADR) (NYSE:JHX) 0 0
Eagle Materials, Inc. (NYSE:EXP) 25 1 13
Cementos Pacasmayo ADR (NYSE:CPAC) 0 0

With the returns demonstrated by the aforementioned research, retail investors must always keep an eye on hedge fund and insider trading activity, and Texas Industries, Inc. (NYSE:TXI) is no exception.

Click here to learn why you should track hedge funds

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